IXIS to Undergo More Evolutionary Changes
June 18, 2007
Initiatives at IXIS Asset Management Advisors of Boston will not be slowing down this summer. The firm, a manager of managers with 15 affiliates in its stable, will be cutting several of its mutual funds' management fees, putting its B Share classes into permanent storage and polishing up a new brand name. But it will keep its tag line: The Name Behind the Names.
IXIS distributes 38 mutual funds, 22 of which are under the IXIS Advisor Funds banner and many managed by affiliated firms, including Loomis Sayles, AEW Capital Management, Harris Associates, Reich & Tang and Hansberger Global Investors, the majority of which IXIS acquired last November after owning a minority stake since 2003. It has also become a strong separate account and wrap manager trading on the success of its independent boutique affiliates.
MME Editor-at-Large Lori Pizzani recently spoke to John Pelletier, executive vice president, chief operating officer at IXIS Asset Management Distributors, to discuss the reasons for the changes.
MME: What's the reasoning behind changes at your firm?
Pelletier: Like everyone else, we've had to do things such as cap fund expenses and add breakpoints in order to be competitive. We just thought it was the right thing to do.
MME: What prompted your termination of new sales of B Shares on the IXIS Advisor Funds as of July 30?
Pelletier: In 2002 and 2003, 40% of sales were to B Shares, but last year, B Shares accounted for less than 2%. Then there was that whole need to finance the upfront commissions, and then the financing channels collapsed. And we saw a shift from transaction-based pricing to asset-based pricing.
Many firms, including BlackRock, Dreyfus, ING and Franklin Templeton, have already dropped B Shares. We won't offer B Shares going forward, and over time existing B Shares will convert to A Shares.
MME: Is IXIS' parent company merger what prompted the company and fund group name change from IXIS to Natixis?
Pelletier: Yes, but it won't happen until Aug. 1. Our parent company merged with another French bank last November, creating a company with a $20 billion market cap, and although the Natixis brand name resonates more in Europe than in the U.S., our parent is putting some money behind that single brand. We want financial intermediaries, from Merrill Lynch brokers to RIAs, to know our name, but it's our affiliates' brands that are the way our shareholders get to know us. That's why we have the tag line The Name Behind the Names. We've got all this great talent, and they have their own unique specialties.
MME: Have you leveraged your affiliates' talent for the retirement marketplace?
Pelletier: Yes, especially for our IXIS Income Diversified Portfolio, which allocates among a fixed-income component, an equity dividend portion, a real estate component managed by AEW Capital and Treasury Inflation Protected Securities. It is one of our better sellers right now, and MFS and Fidelity have come out with similar products.
The big question with the retirement market is, "What is a fund I could put my mother's money into?" It's different than just creating a product. It forces you to be a fiduciary. That's how we should be thinking of it.
At the end of the day, there needs to be simplicity for both the end user and even the financial adviser. Everyone's trying to solve the same problem: to create retirement products that solve the "retirement conundrum." It's hard to have good solutions that give the right answer and find the right vehicle.
MME: To what do you attribute your successful growth in 2007?
Pelletier: FRC shows us as the ninth-fastest growing fund firm year-to-date through April 2007 in terms of net flows.
We have centralized our sales force and believe success comes from our diversity of distribution channels: RIAs, broker/dealers, mutual fund wraps, managed accounts, overlay management, sub-advisory opportunities and 401(k)s. We now have $13.5 billion in separate accounts, and we are perceived as the leader in multidisciplinary accounts. We have exceptional products, especially from Loomis Sayles, but also from many of our funds.
In 2003, many consultants were suggesting that clients consolidate their affiliates into one monolithic firm. But that has never been our model in my 10 years here. There could be some efficiency with a single trading desk, but we like the diversity of thought and diversity of opinions.
We've got a Federalist structure, just like the collection of the original 13 colonies. It's a loose federation of these entities. We believe that, at the end of the day, we end up with significantly better products and stronger retention of key asset management talent.
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